Not enough for third ground handler at Changi Airport

Courtesy en.wikipedia.org

IN June last year, the Changi Airport Group (CAG) announced the appointment of a third ground handler – US-based Aircraft Service International Group (ASIG) (See ASIG’S success as third ground handler is important to Changi Airport, Jul 21, 2011). 

Despite the failure of Swissport to penetrate the market monopolized by the airport’s only two companies for a long time, i.e. Singapore Airport Terminal Services (Sats) and Changi International Airport Services (Cias), CAG seemed determined to introduce more competition at its hub airport. Swissport set up shop in 2009 and pulled out four years later, weighed down by a loss of more than S$50 million (US$40.5 million).

More than a year after the ASIG announcement, there is no news of it setting up base at Changi. While hardly anything is known about ASIG’s obligations to see the proposition through to materialization, sources said it is unlikely to happen any time soon, if ever. Then, it was thought that Swissport was in part done in by the poor global economy, which by 2009 was showing signs of recovery. Hence, ASIG would fare better. Unfortunately, the economic situation is far from being stable. 

Changi’s growth as the region’s hub airport no doubt is a strong pull factor for any business prospect. But the recent decision by Qantas – entering into a partnership with Emirates Airlines – to shift its hub for European flights to Dubai International Airport has dealt an untimely blow to its status, although Qantas has said it would continue to use Changi for flights connecting across Asia. Nonetheless, with Asean Open Skies coming on stream in 2015, the volume at Changi will continue to grow although the concentration is likely to be low-cost carriers.

We hark back to the days when Sats and Cias protesting the entry of Swissport, cited the limited market as being not big enough to be shared among three ground handlers. It is obviously an argument whose thrust is dependent upon the answer that one chooses to proffer, and it would be naive to attribute Swissport’s failure to just that.

CAG has hoped the increased competition posed by a third ground handler would drive up service quality and cap prices to reasonable levels that will encourage more airlines to use Changi. Unless the dynamics of the business environment change to adequately facilitate market entry, the potential interest is likely to be low. CAG had favored ASIG over local contenders; one begins to wonder if a joint venture between a local company and an international party – the way that Cias was set up – might have made the entry a little less painful, if not easier.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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